Exhibit K-5
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INSURANCE AND INDEMNITY AGREEMENT
between
AMBAC ASSURANCE CORPORATION
and
Special Value Opportunities Fund, LLC
Dated as of July 13, 2004
SENIOR FACILITY
Table of Contents
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Page
ARTICLE I. DEFINITIONS...........................................................................................2
1.1. General Definitions........................................................................2
1.2. Generic Terms..............................................................................8
ARTICLE II. REPRESENTATIONS, WARRANTIES AND COVENANTS............................................................8
2.1. Representations and Warranties of the Borrower.............................................8
2.2. Affirmative Covenants of the Borrower......................................................8
2.3. Negative Covenants of the Borrower........................................................13
ARTICLE III. CONDITIONS TO ISSUANCE OF THE LOANS INSURANCE POLICY...............................................16
3.1. Issuance of the Loans Insurance Policy....................................................16
3.2. Payment of Fees...........................................................................16
3.3. Closing Documents.........................................................................16
3.4. Certified Documents and Resolutions.......................................................16
3.5. Incumbency Certificate....................................................................17
3.6. Representations and Warranties............................................................17
3.7. Opinions of Counsel.......................................................................17
3.8. Approvals, etc............................................................................17
3.9. No Litigation, etc........................................................................17
3.10. Legality..................................................................................17
3.11. Shadow Ratings............................................................................18
3.12. Filings and Recording.....................................................................18
3.13. No Default................................................................................18
3.14. Additional Items..........................................................................18
ARTICLE IV. REIMBURSEMENT; INDEMNIFICATION......................................................................19
4.1. Policy Premium............................................................................19
4.2. Reimbursement and Additional Payment Obligation...........................................19
4.3. Indemnification by Borrower...............................................................20
4.4. Conduct of Actions or Proceedings.........................................................20
4.5. Contribution..............................................................................21
4.6. Payment Procedure.........................................................................22
ARTICLE V. FURTHER AGREEMENTS...................................................................................22
5.1. Effective Date; Term of Agreement.........................................................22
5.2. Obligations Absolute......................................................................23
5.3. Assignments; Reinsurance; Third-Party Rights..............................................25
5.4. Liability of Ambac........................................................................26
ARTICLE VI. EVENTS OF DEFAULT; REMEDIES.........................................................................26
6.1. Events of Default.........................................................................26
6.2. Remedies; Waivers.........................................................................28
ARTICLE VII. MISCELLANEOUS......................................................................................29
7.1. Amendments, etc...........................................................................29
7.2. Tax Related Restructuring.................................................................29
7.3. Notices...................................................................................30
7.4. Severability..............................................................................31
7.5. Governing Law.............................................................................31
7.6. Consent to Jurisdiction...................................................................31
7.7. Consent of Ambac..........................................................................32
7.8. Counterparts..............................................................................32
7.9. Headings..................................................................................32
7.10. Trial by Jury Waived......................................................................32
7.11. Limited Liability.........................................................................33
7.12. Entire Agreement..........................................................................33
7.13. Limited Recourse..........................................................................33
7.14. No Bankruptcy Petition....................................................................33
7.15. Location of Delivery, etc.................................................................33
INSURANCE AND INDEMNITY AGREEMENT
INSURANCE AND INDEMNITY AGREEMENT, dated as of July 13, 2004 (as may
be amended, modified or supplemented from time to time, this "Agreement") among
Ambac Assurance Corporation, a Wisconsin-domiciled stock insurance corporation
("Ambac"), Special Value Opportunities Fund, LLC, a limited liability company
incorporated under the laws of Delaware (the "Borrower").
INTRODUCTORY STATEMENTS
The Borrower may incur up to $473,000,000 of Loans under Senior Secured
Revolving Notes and Senior Secured Swing-Line Notes (the "Lender Notes")
pursuant to the Credit Agreement (as amended, supplemented or modified from
time to time with the written consent of Ambac, the "Credit Agreement"), dated
as of July 13, 2004, among the Borrower, CDC Financial Products Inc., as
administrative agent (in such capacity, the "Administrative Agent") and as
arranger, Ambac, as insurer, and various financial institutions, which are, or
may become, party thereto, as lenders (the "Lenders"), as such Credit Agreement
may be amended, supplemented and in accordance with its terms, including with
the consent of Ambac to the extent required therein; provided that if the
Credit Agreement is terminated prior to the termination of this Agreement, then
for all purposes of this Agreement, references to the Credit Agreement shall me
the Credit Agreement as in effect immediately prior to its termination. The
Borrower shall use the proceeds of the Loans made under the Lender Notes for
the uses described in Section 6.1.17 of the Credit Agreement.
The Borrower has requested that Ambac, subject to the terms and
conditions set forth herein and in the Loans Insurance Policy, issue its Loans
Insurance Policy (as defined herein) pursuant to which Ambac will insure
certain payments with respect to the Loans made under Lender Notes.
As consideration for Ambac issuing the Loans Insurance Policy, the
Borrower has agreed to pay Ambac a periodic premium, to reimburse Ambac for any
amounts paid by Ambac under the Loans Insurance Policy and to indemnify or
reimburse Ambac for certain liabilities, costs and expenses, all as more fully
set forth herein.
Accordingly, the parties hereto desire to specify the conditions
precedent to the issuance of the Loans Insurance Policy by Ambac and to provide
for the indemnification of Ambac and certain other matters.
AGREEMENTS
THEREFORE, in consideration of the premises set forth herein and in
the Credit Agreement, Ambac and the Borrower hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1. General Definitions. Capitalized terms used but not otherwise
defined herein shall have the meanings specified in the Credit Agreement. In
addition, the following words and phrases shall have the following meanings:
"Accrued Liabilities" has the meaning specified in Section 4.2 hereof.
"Accrued Liabilities Interest Rate" means, as of any date of
calculation, the per annum rate of interest equal to the Federal Funds
Effective Rate plus 3% (which amount of interest shall be calculated by Ambac
and evidenced by a certificate of Ambac delivered to the Borrower). The Accrued
Liabilities Interest Rate shall be computed on the basis of a year of 365 days
and the actual number of days elapsed. In no event shall the Accrued
Liabilities Interest Rate exceed the maximum rate permissible under any
applicable law limiting interest rates.
"Adjusted Contributed Company Capital" has the meaning set forth in
the Credit Agreement.
"Ambac Required Reserve Amount" has the meaning set forth in the
Premium Letter.
"Board of Directors" means the Board of Directors of the Borrower or
any duly authorized designee thereof.
"Borrowing Request" has the meaning set forth in the Credit Agreement.
"Certificate of Formation" means the Certificate of Formation of the
Borrower, filed with the Secretary of State of the State of Delaware on
February 18, 2004, and any and all amendments thereto and restatements thereof
filed with the Secretary of State of the State of Delaware.
"Closing Date" means July 13, 2004.
"Code" has the meaning set forth in the Credit Agreement.
"Collateral" has the meaning set forth in the Pledge and Intercreditor
Agreement.
"Collateral Documents" has the meaning set forth in the Credit
Agreement.
"Collateral Valuation Schedule" has the meaning set forth in the
Credit Agreement.
"Common Shareholder" has the meaning set forth in the Credit
Agreement.
"Common Shareholders' Escrow Account" has the meaning set forth in the
Custodial Agreement.
"Company Equity" has the meaning set forth in the Credit Agreement.
"Company Tax Distribution" has the meaning set forth in the Credit
Agreement.
"Contributed Company Capital" has the meaning set forth in the
applicable Collateral Valuation Schedule.
"Controlling Class" has the meaning set forth in the Credit Agreement
or the Pledge and Intercreditor Agreement, as applicable.
"Credit Document" has the meaning set forth in the Credit Agreement.
"Custodial Agreement" has the meaning set forth in the Credit
Agreement.
"Custodian" has the meaning set forth in the Credit Agreement.
"Default" means any event which results, or which with the giving of
notice or the lapse of time or both would result, in an Event of Default.
"Event of Default" has the meaning given that term in Section 6.1
hereof.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Ambac from three Federal funds brokers of recognized
standing selected by Ambac.
"Fund Investments" has the meaning set forth in the applicable
Collateral Valuation Schedule.
"GAAP" has the meaning set forth in the Credit Agreement.
"Increase Endorsement" means an endorsement to the Preferred Shares
Insurance Policy in the form set forth as Exhibit B to the Preferred Shares
Insurance Policy.
"Indebtedness" means, with respect to any Person at any time: (a) any
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b) any
obligations of such Person as lessee under leases which should have been or
should be, in accordance with U.S. generally accepted accounting principles,
recorded as capital leases; (c) any obligations issued for or liabilities
incurred on the account of such Person; (d) any obligations or liabilities of
such Person arising under acceptance facilities; (e) any obligations of such
Person under any guarantees, endorsements (other than for collection or deposit
in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (f) any obligations of such
Person secured by any lien on property or assets of such Person; or (g) any
obligations of such Person under any interest rate or currency exchange
agreement.
"Insured Obligations" has the meaning set forth in the Loans Insurance
Policy.
"Investment Company Act" has the meaning set forth in the Credit
Agreement.
"Investment Holdings Subsidiary" has the meaning set forth in the
applicable Collateral Valuation Schedule.
"Investment Manager" has the meaning set forth in the Credit
Agreement.
"Investment Management Agreement" has the meaning set forth in the
Credit Agreement.
"Lien" has the meaning set forth in the Credit Agreement.
"Loans Insurance Policy" means the Financial Guaranty Insurance Policy
No. AB0779BE relating to the Loans under the Credit Agreement.
"Loan" has the meaning set forth in the Credit Agreement.
"Losses" means an amount equal to (a) any actual out-of-pocket damages
incurred by the party entitled to indemnification or contribution hereunder,
plus (b) any actual out-of-pocket costs or expenses incurred by such party,
including reasonable fees or expenses of its counsel and other expenses
incurred in connection with investigating or defending any claim, action or
other proceeding which entitle such party to be indemnified hereunder (subject
to the limitations set forth in Section 4 hereof), to the extent not paid,
satisfied or reimbursed from funds provided by any other Person other than an
affiliate of such party (provided that the foregoing shall not create or imply
any obligation to pursue recourse against any such other Person), plus (c)
interest on the amount paid by the party entitled to indemnification or
contribution from the date of such payment to the date of payment by the party
who is obligated to indemnify or contribute hereunder at the statutory rate
applicable to judgments for breach of contract.
"Market Value" has the meaning set forth in the applicable Collateral
Valuation Schedule.
"Market Value Price" has the meaning set forth in the applicable
Collateral Valuation Schedule.
"Material Adverse Change" means, in respect of any Person, a material
adverse change in (i) the business, prospects, financial condition, results of
operations or properties of such Person and of its Subsidiaries taken as a
whole, or (ii) the ability of such Person to perform its obligations under the
Transaction Documents to which it is a party.
"▇▇▇▇▇'▇" has the meaning set forth in the Credit Agreement.
"▇▇▇▇▇'▇ Collateral Valuation Schedule" means the ▇▇▇▇▇'▇ Collateral
Valuation Schedule attached as Schedule 9 to the Credit Agreement, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with the Credit Agreement and with the written consent of Ambac. If
the Credit Agreement shall for any reason terminate prior to the termination of
this Agreement, then the "▇▇▇▇▇'▇ Collateral Valuation Schedule" shall be the
▇▇▇▇▇'▇ Collateral Valuation Schedule in affect under the Credit Agreement
immediately prior to the termination thereof.
"Net Asset Value" has the meaning set forth in the Credit Agreement.
"Offering Document" means (i) with respect to the Preferred Shares,
the Confidential Private Placement Memorandum of the Borrower dated July 12,
2004 relating to the Preferred Shares, as such Confidential Private Placement
Memorandum may be amended, supplemented, modified or updated from time to time
in connection with the placement of additional series Preferred Shares and (ii)
with respect to the Common Shares, the Confidential Private Placement
Memorandum of the Borrower dated June 30, 2004 relating to the Common Shares of
the Borrower, in each case, as amended or supplemented through the date hereof.
"Operating Agreement" has the meaning set forth in the Credit
Agreement.
"Organic Documents" has the meaning set forth in the Credit Agreement.
"Over-Collateralization Test" has the meaning set forth in the Credit
Agreement.
"Permitted Liens" has the meaning set forth in the Credit Agreement.
"Person" has the meaning set forth in the Credit Agreement.
"Placement Agency Agreement" means the Placement Agency Agreement,
dated July 13, 2004, between ▇▇▇▇▇▇ Brothers Inc., the Borrower and ▇▇▇▇▇▇▇▇▇▇
Capital Partners, LLC, as the same may be amended, supplemented, modified or
updated from time to time in accordance with its terms.
"Pledge and Intercreditor Agreement" has the meaning set forth in the
Credit Agreement.
"Preferred Shares" means (i) the "Series A" money market cumulative
preferred shares issued pursuant to the Statement of Preferences on the Closing
Date and (ii) the money market cumulative preferred shares issued pursuant to
the Statement of Preferences and identified by series, Date of Original Issue
and amount in any Increase Endorsement to the Preferred Shares Insurance
Policy.
"Preferred Shares Auction Agency Agreement" has the meaning set forth
in the Credit Agreement.
"Preferred Shares Broker-Dealer Agreement" has the meaning set forth
in the Credit Agreement.
"Preferred Shares Insurance Agreement" means the Insurance and
Indemnity Agreement, dated as of the Closing Date, between Ambac and the
Borrower relating to the issuance of the Preferred Shares Insurance Policy.
"Preferred Shares Insurance Policy" means the Preferred Shares
Insurance Policy No. AB0780BE which guarantees the timely payment of dividends
on certain of the Borrower's Preferred Shares and the payment of the aggregate
liquidation preference on such preferred shares.
"Premium" has the meaning set forth in the Premium Letter.
"Premium Letter" means the Premium Letter, dated as of the Closing
Date, between Ambac and the Borrower.
"Proceeding" means the making of a trust, mortgage or assignment for
the benefit of creditors involving all or substantially all of the assets of
the Borrower (other than Permitted Liens); the voluntary or involuntary
dissolution, winding up, total or partial liquidation, reorganization,
bankruptcy, insolvency, receivership or marshalling of assets or liabilities of
the Borrower; or any other statutory, common law or contractual proceeding or
arrangement for the postponement or adjustment of all or a substantial part of
the liabilities of the Borrower.
"Rating Agency Condition" has the meaning set forth in the Credit
Agreement.
"Restricted Payment" means
(i) any payment or other distribution (including,
without limitation, dividends) to any Common Shareholder of the Borrower in
respect of Common Shares;
(ii) any payment or other distribution on account of the
purchase, redemption, retirement or acquisition of any Common Share or other
common equity interest in the Borrower; or
(iii) any payment in respect of any Subordinated Equity
Securities.
For the avoidance of doubt, payments on the Preferred Shares shall not
be treated as Restricted Payments under this Agreement and may be paid by the
Borrower at any time in accordance with the terms of the Operating Agreement.
"Secured Hedging Transaction" has the meaning assigned to such term in
the applicable Collateral Valuation Schedule.
"Secured Parties Representative" has the meaning set forth in the
Credit Agreement.
"Senior Indebtedness" means all Indebtedness and other payment
obligations (including, without limitation, interest that would accrue but for
the filing of a petition initiating a Proceeding, whether or not a claim for
such interest is allowed in the Proceeding) of the Borrower arising under or in
respect of the Credit Agreement, the Lender Notes or other Credit Documents,
the Secured Hedging Transactions, the Preferred Shares Insurance Agreement or
this Agreement, whether outstanding on the Closing Date or thereafter created
or incurred including obligations owing to the Custodian under the Custodial
Agreement, to the Administrative Agent under the Credit Agreement, to the
Secured Parties Representative under the Pledge and Intercreditor Agreement and
to Ambac under this Agreement and the Preferred Shares Insurance Agreement;
provided, however, that Senior Indebtedness shall not include any Indebtedness
or such other obligations incurred in violation of the Credit Agreement.
"S&P" has the meaning set forth in the Credit Agreement.
"S&P Collateral Valuation Schedule" means Schedule 10 to the Credit
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the Credit Agreement and with the written
consent of Ambac. If the Credit Agreement shall for any reason terminate prior
to the termination of this Agreement, then the "S&P Collateral Valuation
Schedule" shall be the S&P Collateral Valuation Schedule in affect under the
Credit Agreement immediately prior to the termination thereof.
"Special Member" has the meaning set forth in the Credit Agreement.
"Statement of Preferences" means the Statement of Preferences of Money
Market Cumulative Preferred Shares of Special Value Opportunities Fund, LLC,
dated July 12, 2004, as amended, modified or supplemented from time to time in
accordance with its terms.
"Structured Product Transaction" has the meaning assigned to such term
in the applicable Collateral Valuation Schedule.
"Subordinated Equity Securities" has the meaning set forth in the
Credit Agreement.
"Subsidiary" has the meaning set forth in the Credit Agreement.
"Term" has the meaning set forth in Section 5.1 of this Agreement.
"Transaction Documents" means the Credit Agreement, the Pledge and
Intercreditor Agreement, the Placement Agreement, the Custodial Agreement, the
Investment Management Agreement, this Agreement, the Loans Insurance Policy,
the Preferred Shares Auction Agency Agreement, the Lender Notes, the
Certificate of Formation, the Operating Agreement, the Preferred Shares
Insurance Policy and the Statement of Preferences.
"Transactions" means the transactions contemplated by the Transaction
Documents.
"Valuation Date" has the meaning set forth in the Statement of
Preferences.
"Valuation Statement" has the meaning set forth in the Credit
Agreement.
1.2. Generic Terms. The term "hereof" or "herein" unless otherwise modified by
more specific reference, shall refer to this Agreement. Unless otherwise
specified, the term "Article" or "Section" shall refer to an Article or Section
of this Agreement.
ARTICLE II.
REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. Representations and Warranties of the Borrower. The Borrower
hereby represents and warrants as follows as of the date hereof and as of each
date upon which any Loan is made under the Credit Agreement or, if earlier, as
of the date specified in the representation or warranty set forth below or
incorporated herein:
(a) Transaction Documents. The representations and warranties of
the Borrower set forth in the Transaction Documents are true and correct and
are incorporated herein for the benefit of Ambac as if set forth in full
herein.
(b) Compliance with Laws. The Borrower has no notice nor any
reasonable basis to believe that any practice, procedure or policy employed or
proposed to be employed by it in the conduct of its business or which it
expects to employ in the conduct of its business violates any law, rule,
regulation, judgment or agreement applicable to it which, if enforced, would
(i) result in a Material Adverse Change with respect to it or impair the
security interest created by the Pledge and Intercreditor Agreement in the
Collateral or (ii) constitute grounds for the revocation of any license,
charter, permit or registration which could reasonably be expected to result
in a Material Adverse Change provided that this covenant set forth in this
Section 2.1(b) shall not be deemed violated with respect the Borrower's
failure to comply with Section 18 of the Investment Company Act or any
successor provision thereto, or any applicable "asset coverage" requirement
set forth therein, in each case unless such failure shall have continued for
ninety (90) days following the Valuation Date upon which such failure to
comply commenced.
2.2. Affirmative Covenants of the Borrower. Except as otherwise
provided below, the Borrower hereby agrees that while any amounts are owing
under the Credit Agreement or this Agreement, unless Ambac shall otherwise
expressly consent in writing:
(a) Corporate Existence. The Borrower shall (i) do or cause to
be done all things necessary to preserve and keep in full force and effect its
valid limited liability company existence under the laws of the jurisdiction
of its organization, (ii) continue to be duly qualified and duly authorized to
do business in each jurisdiction in which such qualification is necessary to
the conduct of its business or to protect the validity and enforceability of
the Transaction Documents and the security interest in the Collateral created
in favor of the Secured Parties Representative pursuant to the Pledge and
Intercreditor Agreement and (iii) conduct its business in accordance with the
terms of the Organic Documents and the representation contained in Section
5.17 of the Credit Agreement.
(b) Compliance With Applicable Laws. The Borrower shall comply
with all applicable statutes, rules, regulations, orders and restrictions of
any governmental authority, department, commission, board, regulatory
authority, bureau, agency and instrumentality, in each respect of the conduct
of its business and the ownership of its properties, except such as are being
contested in good faith and by appropriate proceedings in a manner such as not
to cause a Material Adverse Change, and except for such non-compliance as
shall not, individually or in the aggregate, cause a Material Adverse Change.
Without limiting the foregoing, the Borrower shall comply with Section 18 of
the Investment Company Act or any successor provision thereto, and any
applicable "asset coverage" requirement set forth therein; provided that this
covenant set forth in Section 2.2(b) shall not be deemed violated with respect
the Borrower's failure to comply with Section 18 of the Investment Company Act
or any successor provision thereto, or any applicable "asset coverage"
requirement set forth therein, in each case unless such failure shall have
continued for ninety (90) days following the Valuation Date upon which such
failure to comply commenced.
(c) Maintenance of Licenses. The Borrower shall maintain all
licenses, permits, charters and registrations which, if not maintained, could
reasonably be expected to result in a Material Adverse Change.
(d) Maintenance of Insurance. The Borrower shall maintain
insurance (including directors and officers insurance and errors and omissions
insurance) consistent with the type and amount of insurance carried by Persons
engaging in similarly situated businesses.
(e) Compliance with Transaction Documents. The Borrower shall
comply in all material respects with the terms and conditions of, and perform
in all material respects its obligations and enforce in all material respects
its rights under, the Investment Management Agreement, the Operating
Agreement, the Credit Agreement, the Statement of Preference, the Preferred
Shares Insurance Agreement and each other Transaction Document to which it is
a party.
(f) Collateral Valuation. The rights of Ambac set forth in
Section 6.1.1(e) of the Credit Agreement shall survive the termination of the
Credit Agreement and shall be deemed set forth herein in full.
(g) Notice of Material Events. The Borrower will, in addition to
any other notices, certificates or information provided pursuant to this
Agreement, inform Ambac in writing of the occurrence of any of the following,
promptly upon becoming aware thereof:
(i) the commencement or threat of any rule-making or
disciplinary proceeding or the promulgation of any proposed or final rule
(other than a rule or proceeding which has general applicability to
Persons including the Borrower) which could result in a Material Adverse
Change with respect to the Borrower or impair in any material respect the
security interest created by the Pledge and Intercreditor Agreement in
the Collateral; and
(ii) the commencement of any proceedings by or against it in any
court of competent jurisdiction or before any governmental body or
agency, or before any arbitration board, or the threat of any such
proceedings, which either (i) involves an amount in dispute in excess of
$25,000,000 (or, during the 18 months following the date hereof,
$15,000,000) with the Borrower or (ii) if adversely determined, could
result in a Material Adverse Change with respect to the Borrower or
impair in any material respect the security interest created by the
Pledge and Intercreditor Agreement in the Collateral;
(iii) the receipt of notice from any agency or governmental body
having authority over the conduct of its business that (A) it is being
placed under regulatory supervision, (B) any license, permit, charter,
membership or registration material to the conduct of its business is to
be suspended or revoked, or (C) it is to cease and desist any practice,
procedure or policy employed by it in the conduct of its business, and
such cessation could result in a Material Adverse Change with respect to
the Borrower or impair in any material respect the security interest
created by the Pledge and Intercreditor Agreement in the Collateral;
(iv) any change in the location of Borrower's jurisdiction of
organization or any change in the location of the Borrower's books and
records;
(v) the occurrence of any Default or Event of Default;
(vi) the commencement of any proceedings by or against the
Borrower under any applicable bankruptcy, reorganization, liquidation,
rehabilitation, insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver, liquidator, conservator,
trustee or similar official shall have been, or may be, appointed or
requested for the Borrower or any of its assets;
(vii) the annual renewal (with a copy) of, and any material
change to, the insurance maintained pursuant to Section 2.2(d) hereof;
and
(viii) the receipt of notice of any claim or order by any taxing
authority that material taxes are owed by the Borrower.
(h) Disclosure Document. Each Offering Document, as of its
respective date, did not, and as of the Closing Date and each date it is
delivered by or on behalf of the Borrower to investors does not, contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided that the Borrower makes no representation or warranty as to the
information contained in or omitted from the Offering Document in reliance
upon and in conformity with the written information relating to Ambac the
Preferred Shares Insurance Policy and the Loans Insurance Policy.
(i) Audits; Recordkeeping.
(i) The Borrower shall allow Ambac to conduct physical audits at
the Borrower's expense, using Ambac's own personnel and/or agents employed on
Ambac's behalf, of the assets of the Borrower as often as Ambac may reasonably
deem necessary or desirable; provided, that, at any time prior to the
occurrence of a Default, Ambac shall conduct not more than one physical audit
in any one fiscal year of the Borrower; and provided, further, that upon the
occurrence and during the continuance of a Default, Ambac may engage in any
number of physical audits which Ambac deems necessary or desirable.
(ii) The Borrower shall keep proper books and records reflecting
all of its business affairs and transactions in accordance with GAAP and
permit Ambac, on reasonable notice and at reasonable times and intervals
during ordinary business hours, to visit all of its offices and to discuss its
financial matters with officers of the Borrower and its independent public
accountants. The Borrower shall permit Ambac on reasonable notice and at
reasonable times and intervals during ordinary business hours, to examine and
make copies of any of the books or other records of the Borrower. In addition
to the foregoing, the Borrower shall pay any reasonable fees of any
independent public accountants or otherwise incurred in connection with the
exercise by Ambac of its rights pursuant to this Section 2.2(i).
(j) Further Assurances.
(i) The Borrower shall at its own expense promptly take, or
cause to be taken, such actions as may be necessary or desirable, in the
reasonable judgment and at the request of Ambac, (A) to create and maintain
the Lien of the Pledge and Intercreditor Agreement as a valid and perfected
security interest of first-priority covering the Collateral and (B) to
preserve and protect fully the perfected security interest of the Secured
Parties Representative in, and all rights of the Secured Parties
Representative with respect to, the Collateral, including, without limitation,
the execution and filing of all necessary instruments, necessary to be kept
and filed in such manner and in such places as may be required by law to
preserve, protect and perfect fully the security interest of the Secured
Parties Representative with respect to the Collateral.
(ii) The Borrower shall, upon the reasonable request of Ambac,
from time to time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, within a reasonable period of such request, such
amendments or supplements hereto or to the other Transaction Documents,
subject to the terms thereof, and such further instruments and take such
further action as (in each case) may be reasonably necessary to effect the
intention, performance and provisions of the Transaction Documents or to
protect the interest of the Secured Parties Representative in the Collateral,
free and clear of all Liens other than Permitted Liens.
(iii) The Borrower shall cooperate with S&P and Moody's in
connection with any review of the transactions contemplated by Transaction
Documents which may be undertaken by S&P and Moody's after the Closing Date,
in each case so long as Moody's or S&P, as applicable, is rating the credit
risk underlying the Loans Insurance Policy.
(iv) The Borrower will not use, or distribute to any Person for
use, or permit the use of any Offering Document in connection with the offer
and sale of the Preferred Shares unless such Offering Document includes or
incorporates by reference such information as has been expressly furnished by
Ambac for inclusion therein and the information therein or incorporated by
reference therein concerning Ambac has been approved by Ambac in writing.
(k) Use of Proceeds. The Borrower shall apply its funds towards
the uses set forth in Section 6.1.17 of the Credit Agreement and towards the
other sums payable by it as required or contemplated by the Transaction
Documents and for no other purpose.
(l) Additional Information. In addition to the information
required to be delivered by the Borrower to Ambac pursuant to the terms of the
Credit Agreement, the Borrower shall (i) forward or cause to be forwarded to
Ambac all notices and reports which are required to be delivered to Moody's or
S&P pursuant to the Transaction Documents, (ii) furnish to Ambac any such
information that Ambac may reasonably request from time to time relating to
the Borrower's business or the Collateral and (iii) furnish to Ambac on a
monthly basis, or as otherwise set forth below, the following information with
respect to the Collateral:
(1) the identity of each Fund Investment by name and the
method of acquisition (i.e., originated or purchased in the secondary
market); provided that with respect to any Fund Investment in the
process of being accumulated by the Borrower, the Borrower may elect
to provide a code name for such Fund Investment and, upon request from
Ambac, orally identify such Fund Investment to Ambac by telephone;
(2) the Market Value Price of such Fund Investment;
(3) if applicable, the par value and number of units of such
Fund Investment; and
(4) the classification of such Fund Investment by Asset
Category (as defined in each Collateral Valuation Schedule) and by any
classification set forth as a Portfolio Limitation (as defined in the
applicable Collateral Valuation Schedule) ; provided that, at any
time, if Moody's or S&P is no longer rating the Preferred Shares or
the credit risk of the Preferred Shares Insurance Policy, then the
Borrower shall no longer be required to deliver any information set
forth in this Section 2.2 above to Moody's or S&P, as applicable.
2.3. Negative Covenants of the Borrower. The Borrower hereby agrees
that while any amounts are owing under the Credit Agreement or this Agreement,
unless Ambac shall otherwise expressly consent in writing:
(a) Preservation of Collateral. The Borrower shall not take any
action, or fail to take any action, if such action or failure to take action
could reasonably be expected to materially interfere with the enforcement of
any rights under the Transaction Documents, including (but not limited to) any
amendment of, or consent to any amendment of, the Investment Management
Agreement, the Credit Agreement, the Pledge and Intercreditor Agreement, the
Statement of Preferences or any consent to any waiver of rights or to any
other action under or in respect of the Collateral, that change, amend or
modify the rights, benefits or obligations of Ambac under any Transaction
Document.
(b) Issuance of Shares. The Borrower shall not issue any shares
or rights, warrants or options in respect of capital shares or securities
convertible into or exchangeable for shares, other than as issued or committed
to be placed on the date hereof or, contemplated or expressly permitted by the
Transaction Documents.
(c) Impairment of Rights. The Borrower shall not permit the
validity or effectiveness of the Lender Notes, or any Transaction Document (or
the security interest created by the Pledge and Intercreditor Agreement) to be
impaired in any material respect.
(d) Limitation on Contractual Obligations.
(i) The Borrower shall not enter any Secured Hedging
Transactions unless the contracts governing such Secured Hedging
Transactions provide that Ambac shall have the explicit right to act
on behalf of the Borrower thereunder to the extent permitted by
applicable law and as approved by counsel for the Borrower regarding
all terms and conditions pertaining to any such Secured Hedging
Transactions.
(ii) The Borrower shall not acquire any Structured Product
Transactions unless the contracts governing the acquisition of such
Structured Product Transactions provide that Ambac shall have the
explicit right to act on behalf of the Borrower thereunder to the
extent permitted by applicable law and as approved by counsel for the
Borrower regarding all terms and conditions pertaining to any such
Structured Product Transactions.
(e) Waivers or Amendments. Subject to Ambac's obligations set
forth in Section 7.2 hereof, the Borrower shall not, except as expressly
consented to by Ambac in writing or otherwise waive, modify or amend, or
consent to any waiver, modification or amendment of any provisions of the
Transaction Documents, which could reasonably be expected to be adverse in any
material respect to the interests of Ambac. The Borrower shall notify Ambac
and Moody's (so long as ▇▇▇▇▇'▇ is rating the risk securing Ambac's
obligations under the Loan Insurance Policy and the Preferred Shares Insurance
Policy) five (5) Business Days prior to the effectiveness of any proposed
amendment for which the consent of Ambac has not been sought.
(f) Enforcement. Except as set forth in the Transaction
Documents, the Borrower shall not take any action, or fail to take any action,
if such action or inaction would materially interfere with the enforcement of
any rights of Ambac or the Secured Parties Representative under any of the
Transaction Documents.
(g) Taxes. The Borrower shall pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, all taxes,
assessments or other governmental charges levied or imposed upon the Borrower
or upon any of its income, profits or property; provided, that the Borrower
shall not be required to pay or discharge or cause to be paid or discharged
any such tax, assessment or charge, (i) the amount, applicability or validity
of which is being contested in good faith by appropriate proceedings and for
which disputed amounts adequate reserves in accordance with generally accepted
accounting principles in the United States have been made or (ii) the failure
of which to pay or discharge could not result in a Material Adverse Change or
a material adverse effect on the Collateral.
(h) Limitation on Indebtedness. The Borrower shall not create,
incur or suffer to exist any Indebtedness other than as expressly permitted
under Section 6.2.2 of the Credit Agreement.
(i) Restriction on Business. The Borrower shall not engage in
any business or activity other than those described in Section 5.17 of the
Credit Agreement.
(j) Mergers. Subject to Ambac's obligations set forth in Section
7.2, the Borrower shall not consolidate with or merge with or into any other
Person or entity or convey or transfer its properties and assets substantially
as an entirety to any Person or entity.
(k) Liquidation; Insolvency. The Borrower shall not, prior to
the date that is one year and one day after payment in full of all Senior
Indebtedness and Preferred Shares and any of its obligations to Ambac,
institute proceedings to be adjudicated a bankrupt or insolvent, or consent to
the institution of bankruptcy or insolvency proceedings against it, or file a
petition seeking or consenting to reorganization or relief under any
applicable law relating to bankruptcy or insolvency, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of it or a substantial part of its property, or make
any assignment for the benefit of its creditors, or admit in writing its
inability to pay its debts generally as they become due, or take any corporate
action in furtherance of any such or any similar action; provided, that the
foregoing shall not prohibit any liquidation of the Borrower's assets in
accordance with the terms of the Operating Agreement or the Pledge and
Intercreditor Agreement or which results in (1) the payment in full of all
Senior Indebtedness, the Preferred Shares and all obligations due and owing to
Ambac under the Insurance Agreements and (2) the cancellation and surrender of
the Insurance Policies.
(l) Compliance With Organic Documents. The Borrower shall abide
by the restrictions contained in its Organic Documents unless any failure
could not reasonably be expected to be adverse in any material respect to the
interests of Ambac.
(m) Limitations on Restricted Payments. The Borrower shall not
make any Restricted Payment; provided, that the Borrower may, at any time,
make distributions (including dividends) to the Common Shareholders or
repurchase, or make payments or distributions on account of the purchase,
redemption, retirement or acquisition of, the Common Shares in the Borrower
pursuant to and in accordance with the Operating Agreement so long as,
immediately after such payments, distributions or repurchases (x) no Default,
Event of Default, violation of Section 6.1.18 of the Credit Agreement (without
giving effect to the grace periods provided for therein) or default or event
of default under the Credit Agreement shall have occurred and be continuing,
(y) all representations and warranties in Article II hereof are true and
correct in all material respects as of the date made, and (z) Company Equity
(after giving effect to any Subordinated Equity Security) shall be equal to or
greater than (1) Adjusted Contributed Company Capital or (2) in the case of
Company Tax Distributions, Adjusted Contributed Company Capital minus
$35,000,000; provided that the Borrower may, in connection with the issuance
of any Subordinated Equity Securities, make distributions to its Common
Shareholders and the holders of Subordinated Equity Securities in an amount
which does not exceed the net proceeds to the Borrower of such issuance of
Subordinated Equity Securities. Distributions (including dividends) or other
payments or distributions on account of the purchase, redemption, retirement
or acquisition of any Subordinated Equity Security may be made at any time
only so long as (x) all representations and warranties in Article II hereof
are true and correct in all material respects as of the date made and (y)
immediately after giving effect thereto, no Default, Event of Default,
violation of Section 6.1.18 of the Credit Agreement (without giving effect to
the grace periods provided for therein) or default of event of default under
the Credit Agreement shall have occurred or be continuing under the Credit
Agreement.
Notwithstanding the foregoing, in the event that any payment or other
distribution (including, without limitation, any dividend) in respect of the
Borrower's Common Shares would be required to be made in order to preserve the
U.S. federal income tax status of the Borrower as a regulated investment
company or to avoid the imposition of the excise tax under Section 4882 of the
Code (e.g., because the requisite consents from the Common Shareholders for a
"consent dividend" (as defined in Section 565 of the Code) for U.S. federal
income tax purposes have not been obtained by the Borrower in accordance with
the terms of the Operating Agreement), such payment or distribution may be
distributed for the benefit of the Common Shareholders and deposited into the
Common Shareholders' Escrow Account established pursuant to the Custodial
Agreement. Funds deposited in the Common Shareholders' Escrow Account shall not
be released to the Common Shareholders unless and until the Borrower complies
with the restrictions set forth in the preceding paragraph. If the requisite
consents from the Common Shareholders for a "consent dividend" have been
obtained, the Borrower shall be permitted to pay any U.S. withholding taxes
arising in respect of such "consent dividend".
(n) Investment Holding Subsidiary Documentation. The Borrower
shall provide Ambac prompt notice of the creation of an Investment Holding
Subsidiary and deliver with such notice a copy of the organizational documents
of such Investment Holding Subsidiary.
(o) Manager-Owned Securities.
(i) The Borrower shall not issue any Indebtedness or
membership interests to the Investment Manager and/or any affiliate of the
Investment Manager under any contract or agreement that would permit the
Investment Manager to vote or direct any action related to the removal or
replacement of the Investment Manager.
(ii) The Borrower shall not purchase any securities issued by
issuers of structured finance securities which are managed by the Investment
Manager.
ARTICLE III.
CONDITIONS TO ISSUANCE OF THE LOANS INSURANCE POLICY
3.1. Issuance of the Loans Insurance Policy. Ambac agrees to issue
the Loans Insurance Policy, (a) subject to the Credit Agreement being in
effect on the Closing Date and (b) further subject to satisfaction of the
conditions precedent set forth below in this Article III.
3.2. Payment of Fees. (a) The Borrower shall have paid or provided
for the payment of all fees and expenses incurred in connection with its
formation and maintenance in Delaware and (b) pursuant to the letter governing
Ambac's engagement and the Premium Letter, the Borrower shall have paid or
shall have arranged for the payment of (i) the fees of Ambac's counsel (plus
disbursements) in connection with the Transactions, (ii) all initial rating
agency fees of S&P and Moody's and (iii) Ambac's out-of-pocket expenses,
including, but not limited to, travel costs in the case of clauses (a) and (b)
through such date.
3.3. Closing Documents. (a) Ambac shall have confirmed to its
satisfaction that all conditions to be satisfied under each Transaction
Document have been satisfied on or prior to the Closing Date, and (b)
simultaneously herewith, Ambac shall have received an executed copy of each
Transaction Document, in form and substance reasonably satisfactory to Ambac.
3.4. Certified Documents and Resolutions. Ambac shall have received a
copy of (i) the Organic Documents (as amended in accordance with the terms
hereof and thereof through the date of delivery), and (ii) the resolutions of
the Borrower's Board of Directors authorizing the execution, delivery and
performance by the Borrower of each of the Transaction Documents (as amended
in accordance with the terms hereof and thereof through the date of delivery),
and the performance by the Borrower of the Transactions, certified by an
authorized representative of the Borrower (which certificate shall state that
such Organic Documents, resolutions and the Transaction Documents are in full
force and effect without modification on the Closing Date).
3.5. Incumbency Certificate. Ambac shall have received a certificate
of the Secretary or an Assistant Secretary or a Director of the Borrower
certifying the names and signatures of the authorized representatives of the
Borrower authorized to execute and deliver each Transaction Document to which
it is a party and certifying that shareholder consent to the execution and
delivery of such documents has been obtained or is not necessary.
3.6. Representations and Warranties. The representations and
warranties of the Borrower in this Agreement shall be true and correct in all
material respects as of the date hereof or, if earlier, such other date so
specified in such representation or warranty, and Ambac shall have received a
certificate of an Authorized Officer of the Borrower to that effect.
3.7. Opinions of Counsel. Ambac shall have received all opinions of
counsel addressed to Ambac in respect of the Borrower, the Collateral, the
Transaction Documents, certain corporate, security and securities law matters,
certain matters relating to the other parties to the Transaction Documents and
the Transactions, each addressing such matters as Ambac may reasonably
request, and all such legal opinions shall be in form and substance reasonably
satisfactory to Ambac.
3.8. Approvals, etc. Ambac shall have received true and correct
copies of all approvals, licenses and consents, if any, required to be
obtained by the Borrower in connection with the Transactions.
3.9. No Litigation, etc. There is no pending or, to the best
knowledge of the Borrower, threatened, litigation, action, proceeding, order,
investigation or claim, at law or in equity before any governmental authority
effecting the Borrower or the Investment Manager or any of their respective
properties, assets or revenues which could reasonably be expected to result in
Material Adverse Change to the Borrower.
3.10. Legality. No statute, rule, regulation or order shall have been
enacted, entered or deemed applicable by any government or governmental or
administrative agency or court which would make the Transactions or the
Transaction Documents illegal or otherwise prevent the consummation thereof.
3.11. Shadow Ratings. Ambac shall have received confirmation,
satisfactory to it, that the risk secured by the Loans Insurance Policy
constitutes an "AA" risk by S&P and the risk securing Ambac's obligations
under the Loans Insurance Policy and the Preferred Shares Insurance Policy,
collectively, constitutes an "Aa2" risk by Moody's.
3.12. Filings and Recording. Ambac shall have received evidence
reasonably satisfactory to it of the filing and/or recording in all necessary
jurisdictions (or such filing and/or recording having been provided for in a
manner reasonably satisfactory to Ambac) of all documents and such appropriate
instruments, in form and substance reasonably satisfactory to Ambac, as may be
necessary in the reasonable opinion of Ambac to perfect the security interests
created by the Pledge and Intercreditor Agreement, and all taxes, fees and
other charges payable in connection with such execution, delivery, recording
and filing shall have been paid. The Borrower shall be, as of the Closing
Date, in compliance with the terms of the Transaction Documents to which it is
a party.
3.13. No Default. No Default or Event of Default shall have occurred
hereunder (as defined herein) or "default" or "event of default" under any
Transaction Document (in each case, as defined therein) shall have occurred
thereunder.
3.14. Additional Items. Ambac shall have received such other
documents, instruments, approvals or opinions requested by Ambac as may be
reasonably necessary to effect the Transactions, including but not limited to
evidence satisfactory to Ambac that the conditions precedent, if any, in the
Transaction Documents have been satisfied or waived in writing.
ARTICLE IV.
REIMBURSEMENT; INDEMNIFICATION
4.1. Policy Premium. The Borrower shall pay to Ambac the Premium
payable at the times and in the amounts specified in the Premium Letter.
4.2. Reimbursement and Additional Payment Obligation. (a) The
Borrower shall pay to or on behalf of Ambac (in accordance with the
instructions of Ambac, and subject to the terms of the Credit Agreement) the
following (together with amounts payable under Section 4.2(b) below,
collectively, the "Accrued Liabilities")
(i) all amounts paid by Ambac under the Loans Insurance Policy
for the benefit of the lenders under the Credit Agreement (unless such
amounts have previously been repaid to Ambac);
(ii) all amounts advanced or paid by Ambac (but not in the form
of a payment under the Loans Insurance Policy) under the Transaction
Documents or any substitute therefor; and
(iii) all reasonable out-of-pocket costs and expenses incurred
in connection with the Transactions by Ambac, including, but not limited
to, (A) rating agency fees and (B) attorneys' and accountants' fees and
expenses in connection with (i) any accounts established to facilitate
payments under the Loans Insurance Policy, this Agreement or the Credit
Agreement, (ii) the administration, enforcement, defense or preservation
of any rights in respect of the Transaction Documents or the Loans
Insurance Policy, (iii) the foreclosure against or sale or other
disposition of any Collateral or pursuit of any other remedies under any
of the Pledge and Intercreditor Agreement or the other Transaction
Documents (to the extent such costs and expenses are not recovered from
such foreclosure, sale or other disposition of the Collateral), or (iv)
any amendment, waiver or modification or consent with respect to or
related to the Credit Agreement or the other Transaction Documents, to
the extent not initiated by Ambac, whether or not executed or completed.
(b) The Borrower shall pay to or at the direction of Ambac, the
amounts owed under Section 4.2(a) above, together with interest accrued
thereon at the Accrued Liabilities Interest Rate for the period from, (A) in
the case of amounts due under Section 4.2(a)(i), the date Ambac paid or
advanced such amounts and (B) in the case of amounts due under any other
provision of Section 4.2(a), three (3) Business Days after the earlier of (i)
the date of Ambac's delivery of notice to the Borrower that such amounts are
payable and (ii) the date the Issuer knew of such payment, until, in either
case, the date such amounts are paid in full. Such amounts shall be paid to or
at the direction of Ambac, on or prior to the third Business Day after the
Borrower's receipt of notice from Ambac that such amounts are payable, out of
funds available under the Pledge and Intercreditor Agreement.
4.3. Indemnification by Borrower. The Borrower agrees to pay, and to
protect, indemnify and save harmless, Ambac and its officers, directors,
shareholders, employees, agents and each Person, if any, who controls Ambac
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against all Losses incurred by reason of:
(i) any statement, omission or action (other than of or by
Ambac) in connection with the offering, issuance, sale or delivery of the
Lender Notes, the Preferred Shares or the Common Shares;
(ii) the negligence, bad faith, willful misconduct, misfeasance,
malfeasance or theft committed by any director, officer, employee, agent
or advisor of the Borrower in connection with any Transaction Document;
(iii) the violation by the Borrower of any domestic or foreign
law, rule or regulation, including, but not limited to, any securities or
banking law, rule or regulation in connection with any issuance, offer
and sale of the Lender Notes, the Preferred Shares or the Common Shares,
or any judgment, order or decree applicable to it;
(iv) the breach by the Borrower of any representation, warranty
or covenant under any of the Transaction Documents or any agreement,
certificate or instrument executed in connection therewith or any event
of default under any Transaction Document or any agreement, certificate
or instrument executed in connection therewith or any event which, with
the giving of notice or the lapse of time or both, would constitute an
event of default thereunder; or
(v) any untrue statement or alleged untrue statement of a
material fact contained in the Offering Document or any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar
as such claims arise out of or are based upon any untrue statement or
omission in information included in the Offering Document furnished by
Ambac expressly for use therein (all such information so furnished being
referred to herein as "Ambac Information").
4.4. Conduct of Actions or Proceedings. In the event that any action
or regulatory proceeding shall be commenced or claim asserted which may
entitle Ambac, any officer, director, shareholder, employee or agent of Ambac
or any Person controlling Ambac (each, an "Indemnified Party" and,
collectively, the "Indemnified Parties") to be indemnified under this
Agreement, such party shall give the Borrower (the "Indemnifying Party")
written or telegraphic notice of such action or claim reasonably promptly
after receipt of written notice thereof; provided, however, that the failure
to notify the Indemnifying Party shall not relieve it from any liability it
may have to an Indemnified Party otherwise than under this Section 4.4. If any
such action or claim shall be brought against an Indemnified Party, and it
shall notify the Indemnifying Party thereof, the Indemnifying Party, upon the
request of the Indemnified Party, shall retain counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party and shall pay the
reasonable fees and disbursements of such counsel related to such proceeding.
The Indemnified Party shall have the right to employ its own counsel in any
such action in addition to the counsel retained by the Indemnifying Party for
the benefit of the Indemnified Party, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party, unless (a) the
employment of counsel by the Indemnified Party at the Indemnifying Party's
expense has been authorized in writing by the Indemnifying Party, (b) the
Indemnifying Party has not in fact employed counsel reasonably satisfactory to
the Indemnified Party within a reasonable time after receiving notice of the
commencement of the action, or (c) the named parties to any such action or
proceeding (including any impleaded parties) include both the Indemnifying
Party and one or more Indemnified Parties, and representation of both parties
by the same counsel would be inappropriate due to actual or potential
differing interests between them (it being understood, however, that the
Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses
of more than one separate firm of attorneys in addition to local counsel at
any time for all Indemnified Parties), which firm shall be designated in
writing by the Indemnified Parties) in which cases the reasonable fees and
expenses of counsel shall be at the expense of the Indemnifying Party and all
such fees and expenses shall be reimbursed promptly as they are incurred. The
Indemnifying Party shall not be liable for any settlement of any such claim or
action unless the Indemnifying Party shall have consented thereto or be in
default in its obligations hereunder. Any failure by an Indemnified Party to
comply with the provisions of this Section shall relieve the Indemnifying
Party of liability only if such failure is prejudicial to the position of the
Indemnifying Party and then only to the extent of such prejudice. The
Indemnified Party may assume the defense of any such action or claim in
reasonable cooperation with, and with the reasonable cooperation of, the
Indemnifying Party.
4.5. Contribution. (a) To provide for just and equitable contribution
if the indemnification provided by any Indemnifying Party is determined to be
unavailable or insufficient (other than due to the application of Section 4.4)
to hold harmless any Indemnified Party in respect of any Losses referred to in
this Article IV, such Indemnifying Party shall contribute to the amount paid
or payable by such Indemnified Party as a result of such Losses (i) in such
proportion as shall be appropriate to reflect the relative fault of the
Indemnifying Party, on the one hand, and the Indemnified Party, on the other
hand, with respect to the matter that resulted in such Losses or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative fault
referred to in clause (i) above but also the relative benefits received by
each of such parties from the Transactions; provided, however, that an
Indemnifying Party shall in no event be required to contribute to all
Indemnified Parties an aggregate amount in excess of the Losses incurred by
such Indemnified Parties resulting from the breach of representations,
warranties or agreements contained in this Agreement.
(b) The relative fault of each Indemnifying Party, on the one
hand, and of each Indemnified Party, on the other, shall be determined by
reference to, among other things, whether the breach of, or alleged breach of,
any representations, warranties or agreements contained in this Agreement
relates to information supplied by, or action within the control of, the
Indemnifying Party or the Indemnified Party and the parties' relative intent,
knowledge, access to information and Opportunities to correct or prevent such
breach. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 4.5 were to be determined by pro rata
allocation or by any other method of allocation that does not take into
account the equitable considerations referred to herein.
(c) The parties agree that Ambac shall be solely responsible for
the Ambac Information included in any Offering Document and that the remainder
of each Offering Document shall be the responsibility of the Borrower and/or
the respective underwriter or placement agent.
(d) No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) Upon the incurrence of any Losses entitled to contribution
hereunder, the contributor shall reimburse the party entitled to contribution
promptly upon establishment by the party entitled to contribution to the
contributor of the Losses incurred.
4.6. Payment Procedure. All payments to be made to Ambac under this
Agreement shall be paid to Ambac in lawful currency of the United States of
America in immediately available funds on the date when due (in accordance
with the terms of the Pledge and Intercreditor Agreement) to the account
specified in the Premium Letter or as Ambac shall otherwise direct by written
notice to the other parties hereto. In the event that the date of any payment
to Ambac or the expiration of any time period hereunder occurs on a day which
is not a Business Day, then such payment or expiration of time period shall be
made or occur on the next succeeding Business Day with the same force and
effect as if such payment was made or time period expired on the scheduled
date of payment or expiration date.
ARTICLE V.
FURTHER AGREEMENTS
5.1. Effective Date; Term of Agreement.
(a) This Agreement shall be in effect for the period (the
"Term") from the Closing Date until the later of (i) such time as Ambac is no
longer subject to a claim under the Loans Insurance Policy and the Loans
Insurance Policy shall have been surrendered to Ambac for cancellation and
(ii) such date as all amounts payable to Ambac under this Agreement shall have
been paid in full; provided, however, that the provisions of Article IV hereof
shall survive any termination of this Agreement.
(b) The Borrower shall have the right, upon ten (10) Business
Days' notice to Ambac to pay any and all amounts due and payable to Ambac
hereunder in full or in part. Upon any such payment, Ambac shall, to the
extent permitted under the Loans Insurance Policy and applicable law, at the
Borrower's expense cooperate with the Borrower to seek the surrender and
cancellation of the Loans Shares Insurance Policy; provided that nothing set
forth in this sentence shall be deemed to, or construed in any manner to
purport to, alter or modify the Loans Insurance Policy in any respect.
5.2. Obligations Absolute. (a) The obligations of the Borrower
hereunder and under each Transaction Document to which it is a party (subject
to the limitations in each such Transaction Document) shall be absolute and
unconditional, and shall be paid or performed strictly in accordance with this
Agreement or the relevant Transaction Document, as applicable, irrespective
of:
(i) (A) any lack of validity or enforceability of, or any
amendment or other modifications of, or waiver with respect to, any of
the Transaction Documents or (B) any amendment, endorsement or other
modifications of, or waiver with respect to, the Loans Insurance Policy;
(ii) any exchange or release of any obligations hereunder;
(iii) the existence of any claim, set-off, defense (other than
the defense of payment in full), reduction, abatement or other right
which the Borrower may have at any time against Ambac or any other
Person;
(iv) any document presented in connection with the Loans
Insurance Policy proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect, provided that such document is reasonably
believed by Ambac to be genuine;
(v) any payment by Ambac under the Loans Insurance Policy
against presentation of a certificate or other document which does not
strictly comply with terms of the Loans Insurance Policy, provided that
it complies with the same in all material respects;
(vi) any failure of the Borrower to receive the proceeds from
the Loans and the issue of the Lender Notes;
(vii) any breach by the Borrower of any representation, warranty
or covenant contained in any Transaction Document to which it is a party;
or
(viii) any other circumstances, other than payment in full,
which might otherwise constitute a defense available to, or discharge of,
the Borrower in respect of any Transaction Document.
(b) The Borrower agrees to the extent permitted by law to be
bound by this Agreement and:
(i) to the extent permitted by law, to waive and renounce any
and all redemption and exemption rights and the benefit of all valuation
and appraisement privileges in respect of indebtedness, obligations and
security evidenced by any Transaction Document or by any extension or
renewal thereof;
(ii) except as specifically provided for in the Transaction
Documents, to waive presentment and demand for payment, notices of
nonpayment and dishonor, protest of dishonor and notice of protest;
(iii) to waive all notices in connection with the delivery and
acceptance hereof and all other notices in connection with the
performance, default or enforcement of any payment hereunder except as
required by the Transaction Documents; provided that failure to provide a
notice does not reduce the duration of any cure period applicable
hereunder;
(iv) to waive all rights of abatement, diminution, postponement
or deduction, or to any defense other than payment, or to any right of
set-off or recoupment arising out of any breach under any of the
Transaction Documents, by any party thereto or any beneficiary thereof,
or out of any obligation at any time owing to the Borrower;
(v) that its liabilities hereunder shall be unconditional and
without regard to any set-off, counterclaim or the liability of any other
Person for the payment hereof;
(vi) that any consent, waiver or forbearance hereunder with
respect to an event shall operate only for such event and not for any
subsequent event;
(vii) to consent to any and all extensions of time that may be
granted by Ambac with respect to any payment hereunder or other
provisions hereof and to the release of any security at any time given
for any payment hereunder, or any part thereof, with or without
substitution, and to the release of any Person or entity liable for any
such payment; and
(viii) to consent to the addition of any and all other makers,
endorsers, guarantors and other obligors for any payment hereunder, and
to the acceptance of any and all other security for any payment
hereunder, and agree that the addition of any such obligors or security
shall not affect the liability of the parties hereto for any payment
hereunder.
(c) Nothing herein shall be construed as prohibiting the
Borrower from pursuing any rights or remedies it may have against any other
Person in a separate legal proceeding.
5.3. Assignments; Reinsurance; Third-Party Rights. (a) This Agreement
shall be a continuing obligation of the parties hereto and shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. The Borrower may not assign its rights under
this Agreement, or delegate any of its duties hereunder, without the prior
express written consent of Ambac, except to the extent provided in the
Transaction Documents. Any assignment of this Agreement by the Borrower
without the prior express written consent of Ambac shall be null and void.
(b) Ambac shall have the right to grant participations in its
rights under this Agreement and to enter into contracts of reinsurance with
respect to the Loans Insurance Policy upon such terms and conditions as Ambac
may determine in its sole discretion; provided, however, that no such
participation or reinsurance agreement or arrangement shall relieve Ambac of
any of its obligations hereunder or under the Loans Insurance Policy.
(c) In addition, Ambac shall be entitled to assign or pledge to
any bank or other lender providing liquidity or credit with respect to the
Transactions or the obligations of Ambac in connection therewith, any rights
of Ambac under the Transaction Documents or with respect to any real or
personal property or other interests pledged to Ambac or in which Ambac has a
security interest, in connection with the Transactions, subject in each case
to the Liens granted pursuant to the Transaction Documents, provided that no
such bank or other lender shall thereby obtain any direct right against the
Borrower and further provided that no such assignment or pledge shall give any
assignee the right to exercise any discretionary authority that the
Transaction Documents provide shall be exercisable by Ambac and further
provided that no such assignment shall relieve Ambac of any of its obligations
hereunder or under the Loans Insurance Policy.
(d) Except as provided herein with respect to participants,
reinsurers and Indemnified Parties, nothing in this Agreement shall confer any
right, remedy or claim, express or implied, upon any Person, including,
particularly, any Lender, other than Ambac, against the Borrower, and all the
terms, covenants, conditions, promises and agreements contained herein shall
be for the sole and exclusive benefit of the parties hereto and their
successors and permitted assigns. No Person other than Ambac shall have any
right to payment from any premiums paid or payable hereunder or from any other
amounts paid by the Borrower pursuant to Article IV.
5.4. Liability of Ambac. Neither Ambac nor any of its officers,
directors or employees shall be liable or responsible for:
(a) the use which may be made of the Loans Insurance Policy by
the Administrative Agent or for any acts or omissions of the Administrative
Agent in connection therewith;
(b) the validity, sufficiency, accuracy or genuineness of
documents delivered to Ambac in connection with any claim under the Loans
Insurance Policy, or of any signatures thereon, even if such documents or
signatures should in fact prove to be in any or all respects invalid,
inaccurate, insufficient, fraudulent or forged (unless Ambac shall have actual
knowledge thereof), provided that such document is reasonably believed by
Ambac to be genuine; or
(c) any acts or omissions of the Administrative Agent, the
Investment Manager or the Borrower in connection with the Collateral other
than such acts or omissions that are at the written direction (which shall
include any direction sent electronically or by facsimile) of Ambac.
In furtherance and not in limitation of the foregoing, Ambac may
accept documents that reasonably appear on their face to be in order, without
responsibility for further investigation.
ARTICLE VI.
EVENTS OF DEFAULT; REMEDIES
6.1. Events of Default. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) the occurrence of "event of default" under any of the
Transaction Documents, including, but not limited to, an "Event of Default"
under the Credit Agreement;
(b) any demand for payment shall be made under and in accordance
with the terms of the Loans Insurance Policy;
(c) any representation or warranty made by the Borrower under
any Transaction Document to which it is a party, or in any certificate or
report furnished under any such Transaction Document, shall prove to have been
untrue or incorrect in any material respect when made or deemed made, and the
Borrower, as applicable, shall fail to cure such breach of representation or
warranty within the time period specified in such Transaction Document;
(d) (i) the Borrower shall fail to pay when due any material
amount payable by it under any Transaction Document to which it is a party in
accordance with the terms thereof, including, without limitation, any grace
period thereunder; (ii) the Borrower shall have asserted that any of the
Transaction Documents to which it is a party is not valid and binding on any
party thereto; or (iii) any court, governmental authority or agency having
jurisdiction over any of the parties to any of the Transaction Documents or
any property thereof shall find or rule that any material provision of any of
the Transaction Documents is not valid and binding on any of the parties
thereto (other than Ambac);
(e) the Borrower shall fail to perform or observe in any
material respect any other covenant or agreement to be performed or observed
by it hereunder or under any Transaction Document to which it is a party
(except for the obligations described under clause (c) or (d) above) and such
failure shall continue for a period of 30 days or more after the earlier of
(x) notice thereof having been given to the Borrower by Ambac or (y) the first
date on which a portfolio manager, senior accounting officer or controller of
the Borrower had actual knowledge of such default;
(f) an aggregate principal amount of any Indebtedness of the
Borrower or any subsidiary of the Borrower equal to or exceeding 0.80% of the
Net Asset Value shall become due and payable (whether at maturity, by
acceleration or otherwise) and not be paid or satisfied in full, or the holder
of such Indebtedness shall be entitled to require the Borrower or any such
subsidiary to repay, repurchase, redeem, defease or otherwise retire for value
such Indebtedness, in whole or in part, prior to its scheduled payment date
(in each case, after giving effect to any grace periods applicable thereto);
(g) any default by the Borrower in the payment when due (whether
at stated maturity or by acceleration, mandatory prepayment or otherwise) of
any amount in excess of 3.0% of the Net Asset Value (after giving effect to
any grace periods applicable thereto) required to be paid by it under any
Secured Hedging Transaction (other than any such amount that is being
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on the Borrower's
books), and such default shall continue unremedied for a period of ten (10)
Business Days or more;
(h) any final judgments or orders (not subject to appeal) by one
or more courts of competent jurisdiction for the payment of money in an
aggregate amount in excess of 1.5% of the Net Asset Value (after giving effect
to insurance, if any, available with respect thereto) shall be rendered
against the Borrower, and the same shall remain unsatisfied, unvacated,
unbonded or unstayed for a period of thirty (30) days after the date on which
the right to appeal has expired;
(i) the Borrower shall become (i) insolvent or generally fail to
pay, or admit in writing its inability to pay, Indebtedness as it becomes due;
(ii) apply for, consent to, or acquiesce in, the appointment of a trustee,
receiver, sequestrator or other custodian for the Borrower or any property of
any thereof, or make a general assignment for the benefit of creditors; (iii)
in the absence of such application, consent or acquiescence, permit or suffer
to exist the appointment of a trustee, receiver, sequestrator or other
custodian for the Borrower or for a substantial part of the property of any
thereof, and such trustee, receiver, sequestrator or other custodian shall not
be discharged within sixty (60) days; (iv) permit or suffer to exist the
commencement of any bankruptcy, reorganization, Indebtedness arrangement or
other case or proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, in respect of the Borrower
and, if such case or proceeding is not commenced by the Borrower, such case or
proceeding shall be consented to or acquiesced in by the Borrower or shall
result in the entry of an order for relief or shall remain for sixty (60) days
undismissed; or (v) take any action authorizing, or in furtherance of, any of
the foregoing;
(j) any Lien on any Collateral granted shall, at any time after
delivery of the respective Collateral Documents, cease to be fully valid and
perfected as a first-priority Lien, except (i) for Permitted Liens, (ii) Liens
on Fund Investments the Market Value of which if excluded from the Collateral
would not cause a violation of the Over-Collateralization Test (in each case,
without giving effect to any applicable grace period) or (iii) as otherwise
expressly permitted hereunder or under such Collateral Documents;
(k) the Borrower ceases to be a registered "investment company"
under the Investment Company Act for more than ninety (90) days;
(l) the Borrower shall be dissolved or terminated, and not
reconstituted substantially simultaneously therewith (and in no event later
than the same day) in accordance with the Operating Agreement; and
(m) the Investment Manager is removed or terminated pursuant to
the Investment Management Agreement or is otherwise no longer the investment
advisor to the Borrower and Ambac has not approved the new Investment Manager
within thirty (30) days; provided, however, it shall not be an Event of
Default under this Agreement if, at any point in time, there fails to be an
Investment Management Agreement in place and such failure is due to the fact
that such Investment Management Agreement could not timely be renewed for a
period of less than twenty (20) Business Days because of (i) the death of a
Director or other person necessary for renewal, (ii) an act of terrorism, war,
civil disturbance or other hostility, (iii) a breakdown in mass communication
or (iv) any force majeure, or any other cause not within the control of any
party to this Agreement or the Investment Management Agreement.
6.2. Remedies; Waivers.
(a) Upon the occurrence and during the continuance of an Event
of Default, Ambac may exercise any one or more of the rights and remedies set
forth below:
(i) exercise any rights and remedies available to Ambac under
the Transaction Documents in its own capacity or in its capacity as
Controlling Class or Controlling Class under the Pledge and Intercreditor
Agreement; and
(ii) subject to the provisions of the Transaction Documents,
take whatever action at law or in equity as may appear necessary or
desirable in its judgment to collect the amounts then due and thereafter
to become due under the Transaction Documents or to enforce performance
of any obligation of the Borrower under any Transaction Document to which
it is a party.
(b) Unless otherwise expressly provided, whether or not an Event
of Default is continuing, no remedy herein conferred upon or reserved to Ambac
is intended to be exclusive of any other available remedy, but each remedy
shall be cumulative and shall be in addition to other remedies given under the
Transaction Documents or existing at law or in equity. No delay or failure to
exercise any right or power occurring under any Transaction Document upon the
occurrence of any Event of Default or otherwise shall impair any such right or
power or shall be construed to be a waiver thereof, but any such right or
power may be exercised from time to time and as often as may be deemed
expedient.
(c) If any proceeding has been commenced to enforce any right or
remedy under this Agreement, and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to Ambac, then and
in every such case the parties hereto shall, subject to any determination in
such proceeding, be restored to their respective former positions hereunder,
and, thereafter, all rights and remedies of Ambac shall continue as though no
such proceeding had been instituted.
(d) Without prejudice to the rights of the other parties to the
Transaction Documents, Ambac shall have the right, to be exercised in its sole
discretion, to waive any covenant, Default or Event of Default by a writing
setting forth the terms, conditions and extent of such waiver signed by Ambac
and delivered to the Borrower. Any such waiver may only be affected in writing
duly executed by Ambac, and no other course of conduct shall constitute a
waiver of any provision hereof. Unless such writing expressly provides to the
contrary, any waiver so granted shall extend only to the specific event or
occurrence so waived and not to any other similar event or occurrence which
occurs subsequent to the date of such waiver.
ARTICLE VII.
MISCELLANEOUS
7.1. Amendments, etc. This Agreement may be amended, modified or
terminated only by written instrument or written instruments signed by the
parties hereto. No act or course of dealing shall be deemed to constitute an
amendment, modification or termination hereof.
7.2. Restructuring of the Borrower. Ambac hereby acknowledges that in
order to preserve the economics of the Carried Interest (as defined in the
Operating Agreement) payable to the Special Member, the Borrower may desire to
establish a partnership, limited liability company or other business entity
through which it would conduct substantially all its investment activities,
and in order to achieve that desired objective, Ambac agrees to reasonably
cooperate with the Borrower, at the sole expense of the Borrower, to amend,
supplement or otherwise modify the terms and provisions of the Credit
Agreement, the this Agreement, the Preferred Shares Insurance Agreement, the
Preferred Shares Auction Agency Agreement and the Preferred Shares
Broker-Dealer Agreement or any of the Collateral Documents, in each case in a
manner that would not result in a Material Adverse Change; provided that upon
any such amendment, supplement or modification, the Rating Agency Condition
shall be satisfied.
7.3. Notices. All demands, notices and other communications to be
given hereunder shall be in writing (except as otherwise specifically provided
herein) and shall be mailed by registered mail, electronic mail or personally
delivered or telecopied to the recipient as follows:
(a) To Ambac:
Ambac Assurance Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Risk Management, Structured Finance
and Credit Derivatives
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
(in each case in which notice or other communication to Ambac refers to an
Event of Default, a claim on the Loans Insurance Policy or any other event
with respect to which failure on the part of Ambac to respond shall be
deemed to constitute consent or acceptance, then a copy of such notice or
other communication should also be sent to the attention of the General
Counsel and shall be marked to indicate "URGENT MATERIAL ENCLOSED.")
(b) To the Borrower:
Special Value Opportunities Fund, LLC
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and on or after August 1, 2004:
Special Value Opportunities Fund, LLC
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
7.4. Severability. In the event that any provision of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
the parties hereto agree that such holding shall not invalidate or make
unenforceable any other provision hereof. The parties hereto further agree
that the holding by any court of competent jurisdiction that any remedy
pursued by any party hereto is unavailable or unenforceable shall not affect
in any way the ability of such party to pursue any other remedy available to
it.
7.5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAWS PROVISIONS.
7.6. Consent to Jurisdiction. (a) THE PARTIES HERETO HEREBY
IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW YORK
LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT WHICH
HEARS APPEALS FROM ANY COURT THEREOF, IN ANY ACTION, SUIT OR PROCEEDING
BROUGHT AGAINST IT AND TO OR IN CONNECTION WITH ANY OF THE TRANSACTION
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREUNDER OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE
EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE PARTIES HERETO AGREE THAT
A FINAL JUDGMENT IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
PARTIES HERETO HEREBY WAIVE AND AGREE NOT TO ASSERT BY WAY OF MOTION, AS A
DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT
IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT,
ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF
THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THE TRANSACTION DOCUMENTS
OR THE SUBJECT MATTER THEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS.
(b) To the extent permitted by applicable law, the parties
hereto shall not seek and hereby waive the right to any review of the judgment
of any such court by any court of any other nation or jurisdiction which may
be called upon to grant an enforcement of such judgment.
The Borrower shall appoint and designate an agent for acceptance of
service of legal process in the City of New York. The Borrower agrees that
service of such process upon such Person shall constitute personal service of
such process upon it. The name and address of such process agent is:
CT Corporation
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(c) Nothing contained in the Agreement shall limit or affect
Ambac's right to serve process in any other manner permitted by law or to
start legal proceedings relating to any of the Transaction Documents against
the Borrower or their property in the courts of any jurisdiction.
7.7. Consent of Ambac. In the event that Ambac's consent is required
under any of the Transaction Documents, the determination whether to grant or
withhold such consent shall be made by Ambac in its sole discretion, except as
otherwise expressly provided therein without any implied duty towards any
other Person.
7.8. Counterparts. This Agreement may be executed in counterparts by
the parties hereto, and all such counterparts shall constitute one and the
same instrument.
7.9. Headings. The headings of articles and sections and the table of
contents contained in this Agreement are provided for convenience only. They
form no part of this Agreement and shall not affect its construction or
interpretation.
7.10. Trial by Jury Waived. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION
WITH ANY OF THE TRANSACTION DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREUNDER. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IT
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THE TRANSACTION
DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THIS WAIVER.
7.11. Limited Liability. No recourse under this Agreement or any
other Transaction Document shall be had against, and no personal liability
shall attach to, any officer, employee, director, affiliate, advisor or
securityholder of any party hereto, by the enforcement of any assessment or by
any legal or equitable proceeding, by virtue of any statute or otherwise in
respect of any of the Transaction Documents or the Loans Insurance Policy, it
being expressly agreed and understood that each Transaction Document is solely
a corporate obligation of each party hereto (but only to the extent such party
is a party to such Transaction Document), and that any and all personal
liability, either at common law or in equity, or by statute or constitution,
of every such officer, employee, director, affiliate, advisor or
securityholder for breaches by any party hereto of any obligations under the
Agreement or any other Transaction Document is hereby expressly waived as a
condition of and in consideration for the execution and delivery of this
Agreement.
7.12. Entire Agreement. This Agreement, the Loans Insurance Policy,
the Premium Letter and the Credit Agreement sets forth the entire agreement
between the parties with respect to the subject matter thereof, and this
Agreement, the Loans Insurance Policy, the Premium Letter and the Credit
Agreement supersede and replace any agreement or understanding that may have
existed between the parties prior to the date hereof in respect of such
subject matter.
7.13. Limited Recourse. Notwithstanding any other provision hereof,
the obligations of the Borrower hereunder are limited recourse obligations
payable solely from the Collateral in accordance with the Pledge and
Intercreditor Agreement and with the subordination provisions of the Pledge
and Intercreditor Agreement, and following the exhaustion of the Collateral,
any unsatisfied claims shall be extinguished and shall not thereafter revive.
7.14. No Bankruptcy Petition. Ambac covenants and agrees that, prior
to the date which is one year and one day or, if longer, the applicable
preference period then in effect, after the payment in full of all Senior
Indebtedness and Preferred Shares, it will not institute against, or join any
other Person in instituting against, the Borrower any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
proceedings under any bankruptcy, insolvency, reorganization or similar law.
7.15. Location of Delivery, etc. The parties hereto acknowledge that
this Agreement has been executed by Ambac, that this Agreement has been
delivered by the parties hereto and that the Loans Insurance Policy have been
issued and delivery received, all in the State of New York.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Insurance and Indemnity Agreement as of the day and year first
above written.
AMBAC ASSURANCE CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: First Vice President
SPECIAL VALUE OPPORTUNITIES FUND, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Secretary
